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Some health insurance policies can make you sick with worry

The sign on the cement truck's barrel that says "Find a need and fill it" reminds me of a new business arising out of the dysfunctional health insurance/medical services industry. It's the art of determining what bills are correct and knowing when better deals can be negotiated.

Working the system, avoiding overcharges and learning how to shop for the most cost-effective services is something the average layman is simply not equipped to do -- especially when they're sick. Therefore, a cottage industry of consultants or patient advocates is starting to form to meet that need.

I have heard enough anecdotal information over the years to know that a business opportunity exists for any numbers-oriented person with patience, persistence and negotiating skills. The barrier to entry is low. Anyone could develop the necessary background over time by just helping friends or relatives work through the minefield of the industry's billing process. A reasonable fee might be 25 percent of what you save your client.

My interest in the subject started several years ago when a friend who had a multiyear bout with cancer said she routinely spent one full day a month doing nothing but sorting through her bills and figuring out what she needed to pay. This was a woman who ran a successful business, so she had the accounting and negotiating skills that generated positive results. At the time she said, "What do normal people do who have no financial background?"

A recent article in the New York Times had the answer to that question. Basically, they often get ripped off. Either the hospital overbills or the insurance company refuses to pay. Someone covered by Medicare and a health insurance supplement policy can easily wind up with four- and five-figure health care bills when they thought they were fully covered.

A longtime friend who is a retired Kaiser doctor moved to Oregon where there is no Kaiser. He has Medicare plus a conventional heath plan offered by an insurance company. When he broke his foot falling off a ladder, he was absolutely dumbfounded at how much complicated paperwork needed to be filed to get his bills paid. His standard of comparison, of course, was Kaiser, the nation's de facto single-payer system. Kaiser's "claim forms" are all right there in soft copy. Nothing needs to be figured out or sent anywhere.

Then, there's the Medicare fraud. In July 2010, Dr. Donald Berwick was appointed to head the Medicare administration, but failed to be confirmed by Congress for being too partial to national health care. At the time, he stated that as much as one-third of all Medicare payments were fraudulent.

So, what does the advocacy business involve? Start with an Excel spreadsheet with columns that list the dates and charges followed by "patient" and "insurance" based on who is expected to pay. Read the insurance policy carefully to know the coverage arithmetic (deductibles, co-insurance maximums, etc.). Make sure that there is no straying "out of the insurance company network" (where no negotiation results in full retail pricing). Also, for routine services like lab testing, shop around for lower prices that can be half of what hospitals charge for the same services.

Finally, it is critical to be covered under some health insurance policy, even a high-deductible one, because without the negotiated fees of the insurance industry, an uninsured person is just toast. They can expect to be billed $10,000 for a service that the insurance company has otherwise negotiated down to $3,000.

In these circumstances, an advocate can expect to negotiate a reduced fee as part of their service. After all, hospitals recognize that their former patients represent more than 50 percent of the nation's bankrupt citizens. Ten percent of something is worth more than 100 percent of nothing, but it's basically a broken system.

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